10 County Conference 092409v2 - Larimer10 County Conference Economic Outlook Richard L. Wobbekind Associate Dean Leeds School of Business University of Colorado at Boulder Business

10 County ConferenceEconomic Outlook

Richard L. WobbekindAssociate Dean

Leeds School of BusinessUniversity of Colorado at

Boulder

Business Research Division – Leeds School of Business

Real GDP Growth

8.0%

4.0%

6.0%Quarterly GDP

GDP 1990 to 1999 3.1%

0.0%

2.0%

-4.0%

-2.0%Annual GDP

-8.0%

-6.0%


Q1 2000 Q1 2002 Q1 2004 Q1 2006 Q1 2008 Q1 2010Sources: Bureau of Economic Analysis, CO BEO Committee.

Real GDP Growth Forecasts for 2009 and 2010

Forecast 2009 Forecast 2010

Government

Fixed Business Investment

Consumption


Source: www.dismal.com and Consensus Forecast.

-20.0% -15.0% -10.0% -5.0% 0.0% 5.0%

Real US GDP Growth Rate and Colo ado Emplo ment G o th RateColorado Employment Growth Rate

Thousands Colorado Employment vs. US Real GDP

2.9%3.1%3.3%

600

700

US Real GDPGrowth Rate

2.5%2.7%2.9%

400

500 Colorado Employment

Growth

1.9%2.1%2.3%

200

300

497,000 jobs 264,000 650,000

1.5%1.7%1.9%

0

100 added in CO jobs added jobs added < 160,000 jobs added


1970-1979 1980-1989 1990-1999 2000-2009Sources: Bureau of Economic Analysis, Colorado LMI, CO BEO Committees.

National Employment

ThousandsMonth over Month

200300400500

Month-over-Month

-200-100

0100200

-600-500-400-300-200

-900-800-700600

2000 2001 2002 2003 2004 2005 2006 2007 2008 20092000 2001 2002 2003 2004 2005 2006 2007 2008 2009


Sources: Bureau of Labor Statistics, Employment Situation, SA, Dismal Scientist.

Jobless Claims: US vs. Colorado

8,000,0001,000,000Continuing ClaimsInitial Claims US Jobless Claims

4,000,000

6,000,000

8,000,000

500,000

750,000

1,000,000

Initial ClaimsContinuing Claims

0

2,000,000

0

250,000

Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09

60,00080,000100,000

6,000

8,000Continuing ClaimsInitial Claims Colorado Jobless Claims

Initial ClaimsContinuing Claims

020,00040,00060,000

0

2,000

4,000

J 06 J l 06 J 07 J l 07 J 08 J l 08 J 09 J l 09

Continuing Claims


Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09

Source: Not Seasonally Adjusted. US Department of Labor, Employment and Training Administration.

How Long?

Economic Scorecard1 2 3 4 5 6 7 8 9

Presidential Election/Cabinet

Collapse of pFinancial Markets

Housing Slump

Tight Credit Markets

Confidence Crisis

Overleveraged Consumer

Commodity Prices


U.S. Income and Consumption

Change in Personal ConsumptionReal Disposable Personal Income

4 0

5.0

Percent Change

5 0

6.0

Percent Change

2.0

3.0

4.0

4.0

5.0

0.0

1.02.0

3.0

-2.0

-1.0

0.0

1.0

2000 2003 2006 20092000 2003 2006 2009


Sources: Bureau of Economic Analysis, Consensus Forecasts, CO BEO Committee.

Dow Jones Industrial Average

Thousands

12 000

13,000

14,000

10,000

11,000

12,000

8,000

9,000

10,000

Down 25%

Up 46+%

6,000

7,000March 9, 2009


Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09Source: FreeLunch.com

Index of Housing Prices

180

Housing Price Index Fastest Growing U.S. Regions (2000-2009Q2)

2000=100Mountain

150160170 1. Middle Atlantic 174.6

2. Pacific 169.43. South Atlantic 167.44 N E l d 164 5

United States

120130140150 4. New England 164.5

5. Mountain 157.86. United States 153.27. West South Central 145.1

Colorado

100110120

2000 2002 2004 2006 2008

7. West South Central 145.18. West North Central 142.29. East South Central 141.210.East North Central 127.2


2000 2002 2004 2006 2008

Source: Federal Housing Finance Agency (FHFA).

Household Wealth

40 000$ Billions Mutual Fund

30,000

35,000

40,000 Shares

20,000

25,000

30,000Corporate Equities

10,000

15,000

Real

0

5,000

Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009

Estate


Source: Federal Reserve, Flow of Funds Accounts of the United States.

Q1 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009

Index of Consumer Confidence

1985=100

140.0

160.0Recession8 months

Recession8 months

Recession? months

80 0

100.0

120.0

US

40.0

60.0

80.0

0.0

20.0

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008


1990 1992 1994 1996 1998 2000 2002 2004 2006 2008Source: The Conference Board; National Bureau of Economic Research.

Nominal Corporate Profits d U S B i Fi d I t tand U.S. Business Fixed Investment

N i l P T C t P fit Business Fixed Investment

24

Nominal Pre-Tax Corporate Profits (% Change)

10

Business Fixed Investment (% Change)

Percent

812162024

t

0

58.8%

-8-4048

Perc

en

-10

-5

-20-16-12

8

2002 2004 2006 2008 2010-20

-15

2002 2004 2006 2008 2010

-10.3% -18.1%


Source: Bureau of Economic Analysis, Consensus Forecasts, CO BEO Committee.

2002 2004 2006 2008 2010 2002 2004 2006 2008 2010

ISM Indices

ISM Manufacturing Index ISM Non-Manufacturing Index

65

70

65

70ISM Non Manufacturing Index

50

55

60

50

55

60

40

45

50

40

45

50

30

35

30

35


Source: Institute for Supply Management (ISM).

2000 2003 2006 2009 2000 2003 2006 2009

Housing Starts

2 5Millions

2.0

2.5

1.5

0.5

1.0 0.80

0.0

0.5

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


Sources: Census Bureau, Consensus Forecast, CO BEO Committee.

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

U.S. Housing –Supply, Inventory, and Permits

Months of SupplyNew SF Home Inventory (thousands)

14.0

16.0

500.0

600.0Inventory (thousands)

Housing Supply

8 0

10.0

12.0

300 0

400.0SF Homes for Sale

4.0

6.0

8.0

200.0

300.0

0.0

2.0

0.0

100.0


Source: New Houses Sold and For Sale, U.S. Census Bureau.

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

NAHB Housing Market Index

8050=Neutral

60

70

80

40

50

60

20

30

0

10


Source: National Association of Home Builders.

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Foreclosures (August 2009)


Source: RealtyTrac.

Federal Budget Balance

500$ Billions

0

500

-500

-1,500

-1,000

-2,000

1,500

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

-$1453.9-$1634.8

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


Sources: Consensus Forecast, Economy.com.

World GDP

United States States 27%

All Others52%

Japan 9%

Germany Germany 6%China

6%


Source: World Bank. BL Updated: 2/18/09

U.S. Nominal Broad Dollar Index &

$ BillionsReal Net Exports

Real Net Exports$326 11997=100 Nominal Broad Dollar Index

-100

0$ Billions -$326.1

130

1351997=100

-300

-200

115

120

125

-500

-400

105

110

115

-700

-600

95

100

2000 2003 2006 2009


2000 2002 2004 2006 2008Sources: Federal Reserve Board, Bureau of Economic Analysis, Consensus Forecast.

Global GDP Growth Forecasts for 2009 and 2010

Forecast 2009 Forecast 2010

A i P ifi

North America

Western Europe

Asia Pacific

Eastern Europe

Latin America


Source: Consensus Forecast.

-5.0% -4.0% -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0%

Interest Rates

7 0Percent

6.0

7.0

4.0

5.0

10-year T-bond

2.0

3.0

3-month T-bill

0.0

1.03-month T-bill

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


Sources: The Federal Reserve Board, Consensus Forecast.

Commodities

$12$14 Wheat

$160 WTI

$4$6$8

$10

$ Per

Bus

hel

$40

$80

$120

$ Per

Bar

rel

$0$2$4

2000 2003 2006 2009$50 Molybdenum $8 Corn

$0

$40

2000 2003 2006 2009

$20

$30

$40

$

er P

ound

Molybdenum

$4

$6

$8

r Bus

hel

Corn

$0

$10

$20

2000 2003 2006 2009

$ Pe

$0

$2

2000 2003 2006 2009

$ Pe


2000 2003 2006 2009 2000 2003 2006 2009Sources: Energy Information Administration, Dismal Scientist, U.S. Department of Agriculture (No. 1 hard red

winter -ordinary protein, Kansas City, MO), Bloomberg (USDA Toledo No.2 Yellow Corn Not on the River Spot Price), Bloomberg (Molybdenum canned molybdic oxide).

US Number of BankruptciesPersonal and Business

Business Bankruptcies

Personal Bankruptcies

14 000

16,000

18,000

350,000

400,000BankruptciesBankruptcies

10,000

12,000

14,000

200 000

250,000

300,000Personal Bankruptcies

4 000

6,000

8,000

100,000

150,000

200,000

Business Bankruptcies

0

2,000

4,000

0

50,000

,

06Q1 06Q2 06Q3 06Q4 07Q1 07Q2 07Q3 07Q4 08Q1 08Q2 08Q3 08Q4 09Q1 09Q2


Source: www.uscourts.gov

The Colorado Economy


Change in Population

Index of Population Change Change in Colorado Population

120.0

140.0 2000=100

120

140Thousands

80.0

100.0 Natural Change

80

100

40.0

60.0 Net Migration

40

60

-

20.0

0

20


Sources: Department of Local Affairs, CO BEO Committee.

2000 2003 2006 2009 2000 2003 2006 2009

Colorado Employment

Employment(000s)

2,400

55 M th

14 Months(000s)

2 200

2,300 55 Months

2,100

2,200

2,000J 00 J 01 J 02 J 03 J 04 J 05 J 06 J 07 J 08 J 09Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09


Source: Colorado Department of Labor and Employment.

Monthly Non-Farm Employment

Number of Employees

y p y2007 through 2009

2,375

2,400

Number of EmployeesThousands

2008

2 300

2,325

2,350

2007

2,250

2,275

2,300

2009

2,200

2,225

Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec

2009


Source: Bureau of Labor Statistics

The Top 5 vs. The Bottom 5 Statesb dd d d

2009 Forecast

Jobs Added in 2009 and 2010 Forecast2010 Forecast

Alaska (3)Dist. Of Columbia (2)

North Dakota (1)

North Dakota (3)

Texas (2)

Dist. Of Columbia (1)

Colorado (29)South Dakota (5)

Louisiana (4)

Wi i (47)

Colorado (4/2-way tie)

Maryland (4)

North Dakota (3)

Nevada (49)Oregon (48)

Ohio (47)

West Virginia (49)

Florida (48)

Wisconsin (47)

8 0% 6 0% 4 0% 2 0% 0 0% 2 0%

Michigan (51)Arizona (50)

( )

8 0% 6 0% 4 0% 2 0% 0 0% 2 0%

Nevada (50T)

Michigan (50T)

-8.0% -6.0% -4.0% -2.0% 0.0% 2.0%

Source: Moody’s Economy.com


-8.0% -6.0% -4.0% -2.0% 0.0% 2.0%

Change in Average Employment2008 v 2009 January Through July

2008Govt

EHSMining

Other Info L&H Fin ActMfg2,350

2,375

TTU

Const

PBS2 300

2,325

PBS

2,275

2,300

2009

2,225

2,250

2008 G t EHS Mi i Oth I f L&H Fi A t Mf TTU C t PBS 20092008 Govt EHS Mining Other Info L&H Fin Act Mfg TTU Const PBS 2009


Employment Growth and

2009 Employment Rate of Growth

Unemployment Rate by RegionUnemployment Rate

Rural

% Growth

p y8 Month Avg (August) By Region (MSA)

State -3.6%

Grand Junction

% Growth

p y(MSA) By Region – August 2009

State 7.1%

Colorado

Colorado Springs

Denver-Aurora

Colorado Springs

Greeley

Pueblo

Greeley

Pueblo

Boulder

Fort Collins

Colorado

Denver-Aurora

6% 4% 2% 0% 2%

Grand Junction

Fort Collins

0% 2% 4% 6% 8% 10%

Rural

Boulder

-6% -4% -2% 0% 2%Source: Bureau of Labor Statistics.

0% 2% 4% 6% 8% 10%

Key Industries ComparisonP i E l S T l E l

Index

Primary Employment Sectors vs. Total Employment

130.0140.0

Index2000=100

100.0110.0120.0 Professional Business

Services Employment

70 080.090.0

100.0Manufacturing Employment

C l d E l t

50.060.070.0 Colorado Employment

Information Employment


Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09Source: Bureau of Labor Statistics, NSA.

Consumer Price Index

5 0Percent

4.04.55.0

United StatesDenver-Boulder-

2.53.03.5

U ted StatesDenver-Boulder-Greeley

1 01.52.0

0.00.51.0

.25%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009


Source: Bureau of Labor Statistics.

Index of Housing Prices –

HPI Growth Q2 2009 vs Q2 2008

gColorado Metro Areas

One Year Growth

GreeleyPueblo

Ft. CollinsDenver-Aurora

BoulderHPI Growth Q2 2009 vs Q2 2008 One Year Growth

Boulder = 0.6%

Grand Junction= -3.6%

-4% -2% 0% 2% 4% 6% 8%

Grand JunctionNon-metro

Colorado SpringsGreeley Colorado = -1.1%

U.S. = -4.0%

4% 2% 0% 2% 4% 6% 8%

BoulderNon-metro

Grand JunctionHPI Growth Q2 2009 vs Q2 1999 Ten Year CAGR

Grand Junction = 6.9%

GreeleyPueblo

Colorado SpringsFt. Collins

Denver-AuroraBoulder

Greeley 2.2%

Colorado 4.4%

U.S. 5.1%

-4% -2% 0% 2% 4% 6% 8%

Greeley


Source: Federal Housing Finance Agency.

10 County Foreclosure Totals and Rates

Adams Arapahoe

El Paso1 4001,6001,800

9 El Paso

Jefferson

Weld1,0001,2001,400

High Volume, Low Rate

High Volume, High Rate

es Q

2 2

00

Douglas

LarimerPueblo

Weld

400600800 Low Volume,

Low RateLow Volume, High Rate

ore

closu

re

BoulderMesa

Pueblo

0200400Fo

0 100 200 300 400 500 600


Rate (Households Per Foreclosure)

Foreclosure Heat Map (August)


Colorado Retail Trade Sales

12Percent Change

Growth vs. Real Growth

68

1012

Rate of Growth

?4.4%

2024 ?

-8-6-4-2

Real Growth

-12-10

8

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011


2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Source: Colorado State Office of Budget and Planning, Bureau of Labor Statistics, CO BEO Committee

10 County Retail Sales

Percentage of State 2008 Retail SalesAnnualized Growth 2000 to 2008

Arapahoe, 11.5%

Percentage of State 2008 Retail Sales

WeldAdams

Mesa

Adams, 10.3%Other, 35.6%

StatePueblo

Douglas

El Paso, 8.9%

Jefferson, 8 7%Boudler

LarimerEl Paso

State

8.7%Boulder,

5.7%

Larimer 4 8%Douglas, Welds, 4.0%

Mesa, 3.5%Pueblo, 2.6%

JeffersonArapahoe

Boudler


Source: Colorado Department of Revenue

Larimer, 4.8%g ,4.3%0.0% 2.0% 4.0% 6.0% 8.0% 10.0%

10 County Employment

Percentage of 2008 State EmploymentAnnualized Growth 2000 to 2008

Arapahoe, 12.2%

Percentage of 2008 State Employment

WeldMesa

Douglas

El Paso , 10.6%Other, 35.7%

StateAdams

Larimer

Jefferson, 9.2%

Boulder, BoulderEl PasoPueblo

State

7.0%Adams, 6.7%Larimer,

5.7%Douglas, Weld, 3.6%

Mesa, 2.8%Pueblo, 2.5%

ArapahoeJefferson

Boulder


Source: Colorado Department of Labor and Employment.

g ,4.1%0.0% 2.0% 4.0% 6.0% 8.0%

10 County Wages

Percentage of 2008 Total State WagesAverage Annual Wages

Arapahoe, 14.0%

Percentage of 2008 Total State Wages

DouglasArapahoe

Boulderg g

Other, 41.7%El Paso, 9.4%

AdamsJefferson

Stateg

Boulder, 8.1%

Jefferson, 9.1%

MesaLarimerEl PasoAdams

Larimer, 0.5%Pueblo, 1.8%

M 2 3%Weld, Douglas,

Adams, 6.0%Pueblo

WeldMesa


Source: Colorado Data Mining Project.

Mesa, 2.3%,

3.0%Douglas,

4.1%0 10,000 20,000 30,000 40,000 50,000 60,000

Percentage of County Employmentf f

35 00%Percentage

Mining

PST, Manufacturing, Information, Mining

30.00%

35.00%

Professional & Technical Services Manufacturing InformationMining

20.00%

25.00%

10.00%

15.00%

0.00%

5.00%

B ld A h W ld J ff D l L i El P M Ad P blBoulder Arapahoe Weld Jefferson Douglas Larimer El Paso Mesa Adams Pueblo


Sources: Colorado Department of Labor and Employment

Gross General Fund Projections

$/Milli

jDecember 2007 through September 2009

$9 100

$9,400

$/Millions

$

$8,500

$8,800

$9,100December 2007

June 2008

$7,600

$7,900

$8,200

June 2009

December 2008March 2009

$6,700

$7,000

$7,300

FY 2009 FY 2010 FY 2011 FY 2012

September 2009

FY 2009 FY 2010 FY 2011 FY 2012


Source: Colorado Legislative Council.

Colorado Recovery

• Tech led• Stimulus

Housing• Housing• Energy• Agriculture


Issues

• Employment Growth

• Stimulus FundsStimulus Funds

• Government Finance/Retail Sales

• Small Business Survival

• Innovation

• Commodity prices

• ForeclosuresBusiness Research Division – Leeds School of Business

Leeds Business Confidence IndexQ2 2003 Q3 2009Q2 2003 - Q3 2009

Index (50=Neutral) Leeds Business Confidence Index

65

70

75

50

55

60

35

40

45

25

30

35

Q1 2003 Q1 2004 Q1 2005 Q1 2006 Q1 2007 Q12008 Q1 2009


Q1 2003 Q1 2004 Q1 2005 Q1 2006 Q1 2007 Q12008 Q1 2009

Source: LBCI.


Index (50=Neutral) LBCI – Hiring and Capital Expenditures

65

70

75g p p

Hiring

50

55

60

35

40

45Capital Expenditures

25

30

35

Q1 2003 Q1 2004 Q1 2005 Q1 2006 Q1 2007 Q12008 Q1 2009


Q1 2003 Q1 2004 Q1 2005 Q1 2006 Q1 2007 Q12008 Q1 2009

Source: LBCI.


Index (50=Neutral) LBCI – Sales and Profits

65

70

75

Sales

50

55

60

35

40

45Sales

25

30

35

Q1 2003 Q1 2004 Q1 2005 Q1 2006 Q1 2007 Q12008 Q1 2009


Q1 2003 Q1 2004 Q1 2005 Q1 2006 Q1 2007 Q12008 Q1 2009

Source: LBCI.


Index (50=Neutral) LBCI – National and State Expectations

65

70

75p

Colorado

50

55

60

35

40

45

United States

25

30

35

Q1 2003 Q1 2004 Q1 2005 Q1 2006 Q1 2007 Q12008 Q1 2009


Q1 2003 Q1 2004 Q1 2005 Q1 2006 Q1 2007 Q12008 Q1 2009

Source: LBCI.


Documents

10 County Conference 092409v2 - Larimer10 County Conference Economic Outlook Richard L. Wobbekind Associate Dean Leeds School of Business University of Colorado at Boulder Business